Correlation Between Bank of America and ACGR
Can any of the company-specific risk be diversified away by investing in both Bank of America and ACGR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and ACGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and ACGR, you can compare the effects of market volatilities on Bank of America and ACGR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of ACGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ACGR.
Diversification Opportunities for Bank of America and ACGR
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and ACGR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ACGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACGR and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with ACGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACGR has no effect on the direction of Bank of America i.e., Bank of America and ACGR go up and down completely randomly.
Pair Corralation between Bank of America and ACGR
Considering the 90-day investment horizon Bank of America is expected to generate 1.14 times more return on investment than ACGR. However, Bank of America is 1.14 times more volatile than ACGR. It trades about 0.14 of its potential returns per unit of risk. ACGR is currently generating about -0.01 per unit of risk. If you would invest 4,438 in Bank of America on October 25, 2024 and sell it today you would earn a total of 141.00 from holding Bank of America or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. ACGR
Performance |
| Timeline |
| Bank of America |
| ACGR |
Bank of America and ACGR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ACGR
The main advantage of trading using opposite Bank of America and ACGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ACGR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ACGR will offset losses from the drop in ACGR's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| ACGR vs. FT Vest Equity | ACGR vs. Northern Lights | ACGR vs. Dimensional International High | ACGR vs. First Trust Exchange Traded |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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